Hyprop Investments delivered a solid set of results for the year ended 30 June 2026, with stronger retail trading across its South African and Eastern European portfolios, lower gearing and improved funding costs combining to lift distributable earnings.

The retail-focused REIT reported 13.7% growth in distributable income to R1.72 billion, while distributable income per share (DIPS) increased 11.7% to 423 cents, reaching the upper end of management’s 10% to 12% guidance range.

The stronger earnings translated into increased returns for shareholders. Total dividends for FY2026 rose 14.4% to 351.9 cents per share, from 307.7 cents in the previous year. Hyprop has also increased its dividend payout ratio to 82.5% of distributable income from its South African and Eastern European portfolios, from 80% previously, and says the board will continue reviewing opportunities to increase the payout ratio further.

Cash generation remained healthy, with cash generated from operations increasing to R2.95 billion from R2.85 billion. At year-end, Hyprop held R1.7 billion in cash and had R2.1 billion of undrawn bank facilities, giving the group considerable liquidity for capital expenditure, development and acquisition opportunities.

Balance sheet provides greater flexibility
A notable feature of the results was the continued strengthening of the balance sheet. Hyprop’s loan-to-value ratio improved from 33.6% to 28.5%, while the interest cover ratio increased from 2.6 times to 3.1 times.

Total borrowings declined from R14.7 billion to R13.3 billion, assisted by proceeds from the disposal of a 50% undivided interest in Woodlands Boulevard, the R400 million equity raise completed in December 2025, amortisation of European debt and the stronger rand against the euro.

Funding costs also moved in the right direction. The average cost of rand borrowings declined from 9.0% to 8.5%, while the average borrowing margin fell from 150 basis points to 137 basis points. Euro borrowing costs decreased from 4.2% to 3.9%. Hyprop reduced euro borrowings from €302 million to €284 million during the year.

The group raised another R739 million of equity in July 2026, after year-end. This was followed by the €53 million, approximately R1 billion, acquisition of Galleria Burgas in Bulgaria. Following the acquisition and post-year-end capital transactions, group LTV stood at 30.6%, remaining comfortably below the FY2025 level.

Net asset value per share increased 6.7% to R65.62, supported primarily by higher investment property valuations. Across the South African and Eastern European portfolios, independent valuations increased by an aggregate R2 billion during FY2026.

South African portfolio maintains momentum
Hyprop owns nine prime South African shopping centres across the Western Cape and Gauteng. Trading performance remained positive despite pressure on consumers and continued increases in operating costs.

Tenant turnover increased 4.9% to R29.8 billion, while trading density grew 5.5% to R3,988/m² per month. Average monthly footfall increased 1.8% to 7.3 million. Importantly for rental growth, retail vacancies improved from 4.2% to 3.3%, while the weighted average retail reversion rate strengthened to a positive 8.7%. Month-to-month lease exposure by GLA was reduced by 41.5% from June 2025.
Performance varied by centre but several assets delivered particularly encouraging results. Table Bay Mall recorded tenant turnover growth of 10%, trading density growth of 8.8% and footfall growth of 4.9%. Hyde Park Corner achieved a 12.9% increase in tenant turnover, while Clearwater Mall recorded 7.8% trading density growth and welcomed the first Walmart store in Africa. Somerset Mall recorded tenant turnover growth of 7.1% despite disruption associated with its Phase 2 expansion.

South African operating income increased 3.7% despite the Woodlands Boulevard transaction. Excluding that disposal, rental and other lease income increased 4.9%, supported by 5.7% growth in contractual rental income.

The pressure point was expenses. Property expenses rose 14.2%, largely reflecting higher municipal and utility charges and increased depreciation. This pushed the portfolio cost-to-income ratio from 43.5% to 45.8%. Nevertheless, lower finance costs helped South African distributable income increase 15% to R1.03 billion. The South African portfolio valuation increased 7.9%, with Hyprop’s interest valued at R27.4 billion after the Woodlands disposal.

Hyprop invested R559 million in South African capital expenditure during the year, including the Somerset Mall expansion, solar installations at The Glen and CapeGate, battery and solar infrastructure at Hyde Park Corner, and various centre and tenant upgrades.

Eastern Europe adds diversification and earnings growth
Eastern Europe continued to make an increasingly meaningful contribution. Tenant turnover across the portfolio increased 4.2% to €659 million, trading density rose 3.9% and vacancies remained exceptionally low at 0.1%. Average monthly footfall reached 2.3 million.

Eastern European distributable income increased 12.7% to R684.8 million. Lease revenue was up 5%, while net property income increased 4.8% in both euro and rand terms. Lower debt and borrowing costs reduced net interest costs from R295 million to R235 million.

The portfolio’s valuation increased 5.1% in euro terms from €638.1 million to €670.3 million, although the stronger rand reduced its translated value from R13.3 billion to R12.5 billion.

Hyprop’s acquisition of Galleria Burgas after year-end further expands its Bulgarian exposure and reinforces management’s strategy of balancing South African retail assets with dominant shopping centres in Eastern Europe.

Growth remains the priority
Management enters FY2027 with a stronger balance sheet and several organic growth projects underway. These include the next expansion phase at Somerset Mall and a planned 14,746m² expansion of City Center one East in Croatia. Hyprop also continues to assess acquisitions in both South Africa and Eastern Europe.

For FY2027, Hyprop is guiding for 7% to 9% growth in DIPS, assuming broadly stable interest rates, market-related lease renewals, no major economic or tenant disruptions and an average rand/euro exchange rate of R19.50/€.

After several years focused on portfolio repositioning and balance-sheet repair, the FY2026 numbers suggest Hyprop is entering a more expansionary phase. Rising distributions, positive rental reversions, stronger valuations and reduced leverage provide a sound platform, although rising operating costs in South Africa remain an area to watch. With its Western Cape and Eastern European growth strategy increasingly visible in the numbers, FY2027 will test how effectively Hyprop can translate that stronger platform into another year of earnings growth.